Will 08 Crisis Come Back?
The collapse of Silicon Valley Bank has rattled the markets across the world, raising the most uncomfortable questions: Will the 2008 financial crisis repeat? 🫤😱😱 $Bank of America(BAC.US$ $JPMorgan(JPM.US$
Some analysts think that the SVB collapse is more company-specific for now. Joe Biden administration has also argued that safeguards enacted after the 2008 financial crisis would protect the country's economy amid the shuttering of Silicon Valley Bank.
US Treasury Secretary Janet Yellen has expressed full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event. Mike Mayo, Wells Fargo senior bank analyst told cnn.com, “this is night and day versus the global financial crisis from 15 years ago,"
Back then, he said, “banks were taking excessive risks, and people thought everything was fine. Now everyone’s concerned, but underneath the surface, the banks are more resilient than they’ve been in a generation."
Here's my take:
☝️Silicon Valley Bank (SVB) is a bank that serves the tech industry, especially startups, and works with venture capital firms. It failed because many clients withdrew their money in a bank run after signs of trouble emerged.
✌️SVB's specific problem was that it mainly served venture capital and private equity clients, which made it vulnerable to problems in that sector.
👌Other big banks like JPMorgan, Wells Fargo, and Bank of America are more diversified and have stronger balance sheets, so they are less likely to have similar problems.
So if these big banks with strong balance sheets become much more discounted due to the current crisis, I will be happy to add them to my portfolio 🥰🥰
But most importantly, stay within your circle of competence. If you don't understand individual banks well, you can also consider investing in a financial sector ETF like XLF. 🫰
Give me a ❤️ if you find it helpful! #svb #svbnews #investingtips
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